With dangerous heat leaving California electric grid operators struggling to meet heightened demand, natural gas forward prices in the southern part of the state rallied sharply from July 20-26, according to NGI’s Forward Look.

Daytime temperatures have lingered at or above the century mark for most of July in parts of California, driving up cooling loads and prompting the state’s independent system operator (ISO) to warn of a potential supply shortfall twice in the past week. The California ISO said in an Energy Emergency Alert (EEA) Watch on Wednesday some resources went offline amid the excessive heat in the interior. In addition, transmission congestion restricted movement of power to some areas.

An EEA Watch is called when the grid operator’s day-ahead analysis shows...